Businesses question need for huge budget increases

A group of Northern Nevada businesspeople opposed to a gross receipts business tax has issued a 45-page report challenging many of the growth assumptions used to build the governor’s proposed budget.

Citizens for Prosperity and Responsibility called on the governor to re-examine the assumptions used to project welfare, Medicaid, Nevada Check Up and education funding needs saying they believe all are overstated.

“We believe much less new revenue is needed than proposed in your budget,” the group stated in its cover letter to Gov. Kenny Guinn.

That is the first formal challenge by business to the projections used to build the budget. Other opponents have mostly protested the taxes proposed by the governor to bring in the nearly $1 billion more he says is needed to balance the two-year spending plan.

The report was signed by Tom Reviglio, of Western Nevada Supply; Steven Johnson, of Berry-Hinckley Industries; Ken Savage, of Savage and Son; Joe Serpa of Q&D Construction; Conrad Stitser, of Pinnacle Drywall and Stucco; and Brett Barker, of Barker-Coleman Communities.

The governor’s Deputy Chief of Staff Mike Hillerby said he believes the estimates developed by state budget experts and the various agencies are accurate.

The report, prepared by Demographic Solutions of Las Vegas, said the budget projects a 16.6 percent increase in the Nevada Check Up caseload during 2004 but that the population of children under 18 is expected to grow by only 3.1 percent.

Hillerby said the increase was budgeted not to cover growth.

“That’s to take care of people already eligible, but we don’t have the money for in the present budget,” he said, adding it’s cheaper to insure those poorer children using two-thirds federal money than to cover them with Medicaid where the state pays half the tab.

The report makes similar challenges of welfare and Medicaid caseload projections. It says the budget projects nearly 166,000 Medicaid recipients by the end of this fiscal year, rising to 203,777 by the end of 2005. But the Task Force on Tax Policy projected caseloads of less than 160,000 for those years.

“The budget’s proposed increases are not consistent with the Task Force Report, national trends or the recent caseload data,” the report states.

Hillerby said he Medicaid caseload is already more than 162,000.

The group argued welfare’s caseload has decreased 4,780 since last August — a 13.6 percent drop — while the budget projects an 18.4 percent increase this year and 16.4 percent in 2004.

Welfare numbers, Hillerby agreed, have been flat or slightly down for several months. But he expressed concern that the war in Iraq and its effect on Nevada’s tourist economy will change that soon.

“We’re seeing that climb back up again,” he said.

The group also objected to the education increase of nearly 30 percent next year when the state demographer estimates the school aged population will only grow 2.9 percent in 2004 and 2.45 percent in 2005.

And they pointed out that, while teachers claim they are underpaid, an American Federation of Teachers study ranked Nevada teacher salaries ninth in the nation in 2000-2001.

University spending, they pointed out, is projected to increase 9.4 percent next year but actually rose just 2.7 percent this year.

University officials, however, adjusted their estimated enrollment figures upward just two days ago, telling lawmakers they expect 3,955 more students between now and 2005 than even the governor’s proposed budget pays for.

Hillerby said whose estimates are correct remains to be seen but that all those caseload projections will be reviewed again before budgets are closed.

He said revenue estimates for the state will also be reviewed by the Economic Forum in May.

“We’ll get the very best information we can after the economic forum on those budgets,” he said. “And maybe they will go down. That would be great.”

But he made it clear he doubts that: “I don’t think our analysis is flawed.”